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Prosperity Bancshares (PB) Down 3.5% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Prosperity Bancshares (PB - Free Report) . Shares have lost about 3.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Prosperity Bancshares due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Prosperity Bancshares’ fourth-quarter 2021 earnings per share of $1.38 surpassed the Zacks Consensus Estimate by a penny. However, the bottom line declined 6.8% from the prior-year quarter’s figure.
The company did not record any provisions in the reported quarter, which was a positive. Marginally lower expenses and strong capital position were other tailwinds. However, a decline in revenues, lower loan balance and shrinking NIM hurt results.
Net income available to common shareholders was $126.8 million, down 7.5% year over year.
In 2021, earnings of $5.60 per share matched the consensus estimate but decreased 1.4% from the 2020 level. Net income of $519.3 million was down 1.8%.
Revenues & Expenses Decline
Net revenues for the quarter were $280.5 million, down 4.6% from the prior-year quarter. The top line, however, beat the Zacks Consensus Estimate of $279.6 million.
In 2021, total revenues decreased 2.6% to $1.13 billion. Yet the top line matched the consensus estimate.
Net interest income was $244.8 million, down 5% year over year. NIM, on a tax-equivalent basis, contracted 52 basis points (bps) to 2.97%.
Non-interest income totaled $35.8 million, down 2.2%. The decline was due to a fall in mortgage income and other non-interest income.
Non-interest expenses decreased marginally from $120.2 million in the prior-year quarter to $119.5 million. The reported quarter recorded fall in all components except credit and debit cards, data processing and software amortization expenses, regulatory assessments, and FDIC insurance, depreciation and communications. Also in the quarter, the company recorded a net loss on the sale or write-down of other real estates against a gain in the prior-year quarter.
As of Dec 31, 2021, total loans were $18.6 billion, down 1.8% from the end of the previous quarter. Deposits totaled $30.8 billion, up 4.5%.
Strong Credit Quality
As in the year-ago quarter, the company did not record any provision for credit losses in the reported quarter as well. As of Dec 31, 2021, total non-performing assets were $28.1 million, plunging 52.9% from the prior-year quarter end.
The ratio of allowance for credit losses to total loans was 1.54%, down 2 bps year over year. Net charge-offs were $0.81 million, down significantly from $7.6 million recorded in the year-ago period.
Capital Ratios Improve
As of Dec 31, 2021, the Tier-1 risk-based capital ratio was 15.10%, up from 13.74% as of Dec 31, 2020. The total risk-based capital ratio was 15.45% compared with the prior year’s 14.23%.
Profitability Ratios Deteriorate
At the end of the fourth quarter, the annualized return on average assets was 1.37%, down from 1.63% witnessed at the end of the prior-year quarter. Annualized return on common equity was 7.91%, down from the year-earlier period’s 8.98%.
Share Repurchase
In 2021, the company repurchased 767,134 shares at an average price of $67.87 per share.
First-Quarter 2022 Outlook
The company expects non-interest expenses of $118-$120 million.
Fair value loan income accretion is expected to be $1-$2 million.
Given that the forgiveness process is slowing down, the company expects Paycheck Protection Program fee income to be $3-$4 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Prosperity Bancshares has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Prosperity Bancshares has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Prosperity Bancshares (PB) Down 3.5% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Prosperity Bancshares (PB - Free Report) . Shares have lost about 3.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Prosperity Bancshares due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Prosperity Bancshares Q4 Earnings Beat, Revenues Decline Y/Y
Prosperity Bancshares’ fourth-quarter 2021 earnings per share of $1.38 surpassed the Zacks Consensus Estimate by a penny. However, the bottom line declined 6.8% from the prior-year quarter’s figure.
The company did not record any provisions in the reported quarter, which was a positive. Marginally lower expenses and strong capital position were other tailwinds. However, a decline in revenues, lower loan balance and shrinking NIM hurt results.
Net income available to common shareholders was $126.8 million, down 7.5% year over year.
In 2021, earnings of $5.60 per share matched the consensus estimate but decreased 1.4% from the 2020 level. Net income of $519.3 million was down 1.8%.
Revenues & Expenses Decline
Net revenues for the quarter were $280.5 million, down 4.6% from the prior-year quarter. The top line, however, beat the Zacks Consensus Estimate of $279.6 million.
In 2021, total revenues decreased 2.6% to $1.13 billion. Yet the top line matched the consensus estimate.
Net interest income was $244.8 million, down 5% year over year. NIM, on a tax-equivalent basis, contracted 52 basis points (bps) to 2.97%.
Non-interest income totaled $35.8 million, down 2.2%. The decline was due to a fall in mortgage income and other non-interest income.
Non-interest expenses decreased marginally from $120.2 million in the prior-year quarter to $119.5 million. The reported quarter recorded fall in all components except credit and debit cards, data processing and software amortization expenses, regulatory assessments, and FDIC insurance, depreciation and communications. Also in the quarter, the company recorded a net loss on the sale or write-down of other real estates against a gain in the prior-year quarter.
As of Dec 31, 2021, total loans were $18.6 billion, down 1.8% from the end of the previous quarter. Deposits totaled $30.8 billion, up 4.5%.
Strong Credit Quality
As in the year-ago quarter, the company did not record any provision for credit losses in the reported quarter as well. As of Dec 31, 2021, total non-performing assets were $28.1 million, plunging 52.9% from the prior-year quarter end.
The ratio of allowance for credit losses to total loans was 1.54%, down 2 bps year over year. Net charge-offs were $0.81 million, down significantly from $7.6 million recorded in the year-ago period.
Capital Ratios Improve
As of Dec 31, 2021, the Tier-1 risk-based capital ratio was 15.10%, up from 13.74% as of Dec 31, 2020. The total risk-based capital ratio was 15.45% compared with the prior year’s 14.23%.
Profitability Ratios Deteriorate
At the end of the fourth quarter, the annualized return on average assets was 1.37%, down from 1.63% witnessed at the end of the prior-year quarter. Annualized return on common equity was 7.91%, down from the year-earlier period’s 8.98%.
Share Repurchase
In 2021, the company repurchased 767,134 shares at an average price of $67.87 per share.
First-Quarter 2022 Outlook
The company expects non-interest expenses of $118-$120 million.
Fair value loan income accretion is expected to be $1-$2 million.
Given that the forgiveness process is slowing down, the company expects Paycheck Protection Program fee income to be $3-$4 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
At this time, Prosperity Bancshares has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Prosperity Bancshares has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.